Finance Minister Ishaq Dar on Friday said that Pakistan was expecting $1.3 billion in financing from the Industrial and Commercial Bank of China Ltd (ICBC) in the coming days to help shore up its foreign exchange reserves.
Addressing a press conference on the country’s prevailing economic situation in Islamabad, Dar said he was doing the press conference to clear “ambiguity” amid the current scenario.
“All our formalities with the ICBC are complete as of last night. We returned them $1.3bn in the last few months … they are giving it back and have renewed this facility,” Dar said, adding that it was possible that $500 million in the next few days by Monday or Tuesday with a further $500m within 10 days.
He said all documentation for the process was complete.
Regarding whether the country would default or not, Dar said: “We have never defaulted and we won’t now. Yes, we were in a precarious situation and are going through it currently.”
He said the current government had made a “principled decision” whether to save the state or its own politics around the time of last year’s vote of no confidence against Imran .
Dar said the state’s interest was prioritised over political interests at the time, adding that it was the “right decision”.
He criticised the PTI chief, calling on him to reflect on his own past and government’s performance. “They keep going on and on about default [but] their ministers called their provincial finance ministers that … you don’t allow the IMF matter to be resolved,” Dar added.
The finance minister said Imran’s attitude was “selfish”, adding that oppositions around the world worked together with the government on national issues.
He said that instead of coming together to come up with ways of steering Pakistan through the crisis, he said Imran was only concerned about “how can I criticise [the government]”.
Dar said such attitudes had an impact on the financial markets.
He added that “mismanagement and bad governance” were the reasons for Pakistan’s current scenario. The finance minister then went on to discuss key economic indicators during the PTI’s government and where it left them.
“If you look at the indicators in 2013 and then 2018-2020 then Pakistan was at different stages,” Dar said, adding that Pakistan was currently passing through the remaining effects of the PTI government’s economic indicators.
The finance minister also attributed the financial losses arising from last year’s catastrophic floods as being majorly responsible for the country’s issues, adding that over $30 billion loss was suffered.
“Our requirement for the next three to four years is for $16bn or Rs4,000bn.”
He also said that global inflationary pressure was a major reason for rising inflation in the country.
On foreign exchange reserves, Dar said they had reached $3.82bn with the State Bank of Pakistan and combined with amounts held by commercial banks, came around to $9.26bn.
“There will be a further increase in this. I think China has given proof of great friendship,” he said.
Regarding the rupee’s depreciation against the dollar and reports of an artificial price cap, Dar said: “We did not release dollars into the market,” adding that there was no “question of us intervening or us having any capacity for it considering how low our reserves went”.
The finance minister said the government had a “roadmap” and policies for taking the country out of the current “quagmire”, adding, however, that they could not be made public.
“I am confident that by June 30 we will take the State Bank’s reserves to $10bn and national reserves near to $16bn.”
Regarding the progress of negotiations with the International Monetary Fund for a bailout programme, Dar said all prior actions demanded by the Fund were fulfilled.
His presser comes a day after the Pakistani rupee hit a new low against, the interest rate was raised by 300 basis points, and subsequent calls by the PTI for Dar’s resignation.
Ahead of his press conference today, he was approached by reporters outside Parliament House in Islamabad, to whom he repeatedly said to ask him questions at 4:10pm — referring to his expected press conference.
A reporter then asked, “sir, will you be resigning at 4:10pm?”, to which Dar retorted: “Do you have any issue with me working?”
The reporter answered: “Sir, I do not have any problem; I was just asking a question because of the ongoing talk about your resignation. At least refute it.”
Then, a reporter mentioned that former Federal Board of Revenue chairman Shabbar Zaidi had said yesterday that Dar was about to resign.
To this, the finance minister said: “What has he even done with the country? Everyone knows the destruction he has done. He has given refunds worth billions of rupees? He should be in jail right now.”
The finance minister then proceeded to sit in a car and refrain from making any further comments.
PTI, analysts hold Dar responsible
PTI leader Hammad Azhar had said on Thursday that it was important to get rid of Dar — asking either he tender his resignation or be immediately sacked for the sake of the country’s economic security.
Meanwhile, Washington insiders Dawn spoke to on Thursday said Pakistan will ultimately reach an agreement with the International Monetary Fund (IMF) but it was difficult to say exactly when.
“The problem started late last year when former finance minister Miftah Ismail was removed,” said one insider. “He understood the need for course correction and wanted to do so. Dar does not.”
The officials Dawn had spoken to said Dar’s refusal to unhook the currency and withdraw general subsidies and his aversion to debt restructuring hurt the economy.
The criticism from multiple sectors came after the Pakistani rupee sank sharply by Rs18.98 against the dollar as trading closed on Thursday, with the local currency reaching a historic high of Rs285.09 at close, according to the State Bank of Pakistan (SBP).
Analysts had attributed the record drop — 6.66 per cent — to the government’s impasse with the IMF.
Later the same day, the SBP announced it had increased the interest rate by 300 basis points (bps) to 20pc — the highest level since October 1996 — citing rising inflation.